For marine business owners, the function of co-insurance is oftentimes unclear when they are purchasing a marine insurance coverage. For instance, they have difficulties understanding the meaning of “insured to value” when filing a damage claim as well as co-insurance percentages and co-insurance penalties. This is oftentimes the case whenever a client isn’t fully informed as to the impact these factors have on insurance claim payouts.
A brief Word about Marine Business Insurance
There are certain risks involved with owning any type of business, but especially if you own a commercial marine business. Marine insurance company agents and other representatives know the liabilities and risks that marine businesses are exposed to and have developed comprehensive coverages to protect you. Some examples include
- Owner (environmental, artisan, weed control, etc.)
- bed and breakfast boats
- charter (guides, bareboat, sightseeing, sportfishing)
- boat clubs
- commercial fishing boats
- boat schools
- rental facilities
These are important factors to be aware of. If you are in the market for marine business insurance, you should discuss these points with an agent.
What You need to Know
The following is what you need to know about co-insurance and marine business insurance coverage when shopping for a policy:
Co-insurance defined – this type of coverage requires you to pay a percentage of what has been paid against a claim. For instance, when docks or piers get damaged, the insured must pay a pre-specified amount towards repair and replacement costs as listed in the terms of the policy. Although payment amounts vary, there could be a penalty enforced should the coverage be lower than the insure to value amount.
Function of co-insurance – determines the amount of coverage you need to purchase such as 80% of the actual cash value or the replacement costs. Keep in mind that you could be assessed a penalty if you aren’t insured to value and you’ll only receive a portion of the coverage that you’re entitled to. Basically, you might have to pay a large portion of the reconstruction or repairs out of your own pocket.
Penalties – if you don’t insure the value of a marine asset or property, the insurance company can calculate penalties based on percentages stipulated in your policy as well as the amount that’s underinsured. Should a loss occur, then you would only receive a percentage of the insurance payout. This is determined by the percentages listed in your co-insurance policy.
Actual cash value is the current value, factoring in wear and tear or depreciation that negatively impacts the value.
Insure to value means that you carry enough coverage to pay the total replacement cost instead of not having enough.
Replacement cost value – what it now costs to repair or replace the dock or pier that you damaged
For more information regarding co-insurance, discuss your needs with a licensed marine business insurance agent. They would be able to assist you with your requirements.